Chinese scrap prices remained firm last week

China's domestic steel scrap market remained generally stable over August 7-14, supported by lower stocks of scrap among steelmakers amid the mills' firm demand and seasonal scrap supply tightness. Higher iron ore prices also played a part. As of August 14, Mysteel's steel scrap price index was at Yuan 2,555/tonne ($365/t) on delivery and including the 13% VAT, up by a small Yuan 4.1/t on week.

As of August 13, steel scrap stocks at the 61 Chinese blast furnace (BF) and electric-arc-furnace (EAF) steel plants which Mysteel checks decreased for a second week by another 56,200 tonnes or 2.2% on week to reach a one-month low of 2.5 million tonnes. The stocks would be able to sustain the mills for 11.4 days of consumption, 0.1 day shorter than the prior week, according to Mysteel's database.

China's finished steel demand has been softening moderately of late, impacted by the high temperatures in most regions and heavy rains in North China. Nonetheless, as demand on year has been better overall, the Chinese steel mills have been keeping steel output rather high, with most mills preferring to consume more scrap and less iron ore which currently is more expensive, Mysteel Global noted.

As of August 14, Mysteel's PORTDEX 62% Fe Australian Fines index has increased by other Yuan 22/wmt on week to reach Yuan 939/wmt FOT Qingdao including the VAT, or a new high since October 18, 2013, Mysteel's data shows.

Over the same survey week, scrap consumption among the 15 BF and EAF steel mills Mysteel monitors averaged 5,313 tonnes/day as of August 14, up by 1.1% on week.

At the same time, scrap supply has stayed tight. A steel scrap trader from East China's Jiangsu province anticipated a likely rise scrap prices in the next few weeks, observing that "scrap supply may tighten further, as it is getting tougher to collect and process steel scrap in such hot weather."

This article has been published under an article exchange agreement between Mysteel Global and SteelMint Research.